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South Africa Faces Economic Risks from Carbon Intensity, Warns Ramaphosa



In his latest weekly newsletter, President Cyril Ramaphosa has raised concerns about the unsustainable carbon intensity of South Africa's economy. This statement comes ahead of his address at a climate finance symposium hosted jointly by the National Treasury and the Presidential Climate Commission.


Ramaphosa emphasized the global shift towards greener economies, noting that several of South Africa’s key trading partners are implementing decarbonization measures. These efforts could significantly impact the competitiveness of South African exports in these markets.


While the President did not directly mention the European Union’s (EU) upcoming Carbon Border Adjustment Mechanism (CBAM), set to begin in 2026, the implications are clear. Similar measures are being considered by the UK, US, Japan, and Canada to prevent “carbon leakage.” South Africa’s cement, iron, steel, and aluminum sectors are particularly vulnerable to CBAM, with initial research suggesting export declines between 16% and 30% by 2030.


This vulnerability is primarily due to the coal-intensive nature of South Africa’s electricity sector, which elevates Scope 3 emissions for electricity-intensive industries to extremely high levels.


Diplomatic efforts are underway by South Africa to oppose the implementation of CBAM by the EU and other nations. Ramaphosa argues that such unilateral actions contradict the multilateral approach needed to effectively address climate change. Additionally, these measures could burden an already struggling South African economy, which is facing premature deindustrialization and financial constraints that hinder its ability to mitigate carbon emissions and adapt to climate impacts.


Ramaphosa also highlighted the adverse effects of climate change on South Africa. He referred to the 2022 KwaZulu-Natal floods, which resulted in over 300 deaths and extensive damage to social and economic infrastructure. Other severe storms, floods, and recent heatwaves further underscore the urgency of addressing climate issues.


The economic repercussions are significant, affecting sectors such as agriculture, tourism, mining, and manufacturing. Climate change also poses risks to water security, food security, public infrastructure, human settlements, healthcare, and education.


“The increasing frequency of extreme weather events is a stark reminder that we have to accelerate the pace of our efforts,” Ramaphosa stated. “We need to use our fiscal policy – how we manage public finances – to support our response to the shocks of climate change and to advance the just transition to a more inclusive, resilient, and sustainable economy.”


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